KUALA LUMPUR: Malaysia’s economy grew by 5.4 per cent in the first quarter of 2018 (1Q 2018), underpinned by continued expansion in private sector activity and strong support from net exports.

In a statement yesterday, Bank Negara Malaysia (BNM) said on a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.4 per cent (4Q 2017: 1.0 per cent).

It said headline inflation for the quarter under review declined to 1.8 per cent (4Q 2017: 3.5 per cent). It reflected the smaller contribution of domestic fuel prices and due to the smaller increase in global oil prices compared to the previous quarter and a stronger ringgit exchange rate in 1Q 2018.

Malaysia’s economy growth is expected to remain favourable in 2018, with domestic demand continuing to be the key driver.

According to the central bank, growth prospects are further supported by continued positive spillovers from the external sector to domestic economic activity.

“Headline inflation is projected to average between two–three per cent in 2018, due to a smaller contribution from global cost factors and stronger ringgit exchange rate compared to 2017,” it said.

The underlying inflation, as measured by core inflation, is also expected to remain small, due to smaller cost pass-through to retail prices compared to 2017.

Meanwhile, BNM also highlighted three issues in the statement.

The first was,“Trade Disputes: Implications for Trade and Investments”, that assesses the potential impact and policy implications from recent potential trade measures announced by the US and China.

“A key policy consideration includes pursuing reforms to ensure domestic demand remains resilient to mitigate any external shocks to the economy,” it said.

The second being the “Global Slack as a Determinant of Inflation’’ and looking into the influence of the factors associated with globalisation on inflation dynamics in Asia-Pacific economies, that highlights the growing challenges faced by monetary authorities in forecasting and managing inflation.

The third factor was “Improving Quality and Transparency of Services to Financial Consumers”, highlighting to the public, initiatives taken by the financial industry in collaboration with the Bank to improve the quality and transparency of customer services. — Bernama